Personal Finance

How Trump’s Win Will Affect Your Money

Written by Aliyyah Camp

On January 20, 2017, President-elect Donald Trump will take office as the 45th President of the United States. Among all of his legislative proposals, you may be wondering how his presidency will affect your money. In this article, I lay out four main areas of America’s finances that Trump’s proposals may affect and discuss his specific plans.

Income Tax Changes

The first major financial change to expect is a reduction in income tax brackets. Trump has proposed reducing the income tax brackets from seven to three. The proposed tax brackets would be as follows:

  • 12% for single filers making up to $37,500 and married-joint filers making up to $75,000
  • 25% for single filers making up to $112,500 and married-joint filers making up to $250,000
  • 33% for single filers making more than $112,500 and married-joint filers making more than $250,000

For reference, here are the 2016 income tax brackets. With Trump’s changes, some high-income earners will fall under a lower income tax bracket. For example, the marginal tax rate for a single person making $100,000 a year would drop from 28% to 25%. The marginal tax rate would also be capped at 33%, meaning that those making over $413,250 a year would experience a reduction in income tax as well.

There will be mixed outcomes for low-income workers. Those making less than $9,275 a year will experience an increase in income tax – from 10% to 12%. On the other hand, those making more than $9,275 but less than $37,650 will experience a decrease in income tax – from 15% to 12%.

Student Debt

There are currently several different repayment options for student loans. Under the income-based repayment plan, the outstanding balance will be forgiven if you haven’t repaid the entire loan within 20 or 25 years.

Trump plans to offer an improved income-based repayment plan: graduates pay 12.5% of their income for only 15 years before the outstanding balance is forgiven. He’s also pushing to reduce the number of repayment plan options to make the process easier to navigate. Given that the number of people using income-based repayment plans continues to increase, this modification could result in millions of dollars saved for college graduates.

The bigger issue here is college affordability. Trump has addressed this issue on his website, stating that one of his education visions is to:
“Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.”

Though, he hasn’t laid out the details on how he plans to do this nor where he plans to get the funding.

Child Care Plan

Another pillar of Trump’s proposed changes is his child care plan. The three main parts of his child care plan are: guaranteed paid maternity leave, child care tax deductions, and the dependent care savings account.

Guaranteed paid maternity leave – Currently, employers must offer twelve weeks of unpaid, job-protected leave to new mothers. This is mandated by the Family and Medical Leave Act (FMLA). Not many employers go beyond that and offer paid maternity leave. Trump plans to change that by modifying unemployment insurance provisions to include paid maternity leave. For women whose employers don’t offer paid maternity leave, they can receive payment for up to six weeks after birth or adoption under unemployment insurance.

Child care tax deductions – Trump plans to allow parents to write-off child care expenses as deductions above-the-line. In this way, the deductions will apply whether or not the parents choose to itemize their tax returns. Any family making less than $500,000 per year ($250,000 if filing individually), is eligible. One highlight of this change is that stay-at-home parents will also qualify for the child care tax deductions. This gives families a little more financial flexibility in terms of how they choose to handle child care in their homes.

Dependent care savings account – In Trump’s child care plan, he proposes the creation of the dependent care savings account, a tax-favored savings account used for dependent care expenses. Dependents will be defined not only as children, but also as elderly parents and disabled spouses. The maximum contribution limit will be $2,000 per year. Unused money can carry over from year to year. Low-income families would receive a government match of up to $500 per year.

Given the high cost of child care in America, these provisions are much needed. The drawback is that the benefits of these provisions will only be seen if people actually take advantage of them. Whether new mothers will file for unemployment insurance to get the paid maternity leave and whether low-income families will actually contribute to a dependent care savings account are up for debate.

Healthcare Changes

Trump released a four-page document outlining his healthcare reform plans. He plans to completely get rid of Obamacare. He argues that health insurance shouldn’t be mandatory – that an individual should be able to decide not to have health insurance without paying a penalty.

Trump plans to allow people to deduct health insurance premiums on their tax returns, which he hopes will result in additional tax savings.

With the elimination of Obamacare, Trump plans to permit interstate sales of health insurance policies. He argues that this will increase competition among providers and drive the cost down for policy holders.

Trump also plans to expand the eligibility for Health Savings Accounts (HSAs), allowing more families to contribute to this tax-advantaged account and save money indefinitely for medical expenses.

Of course, Trump will have to hash out the details of his healthcare reform even further if he hopes to successfully repeal Obamacare.

Final Thoughts

What do these changes mean for your money? It all depends on your individual or family circumstances. The reduction of income tax brackets may benefit or hurt you depending on your current level of income. If you have a large amount of student debt, you may be able to pay less in the long run with Trump’s proposed changes to the income-based repayment plan. If you have dependents, Trump’s comprehensive child care plan may have some attractive provisions for you. The results of repealing Obamacare are still unclear because we’re not certain how health insurance premiums will be affected.

The takeaway here is that Trump is planning a major overhaul in terms of America’s finances. It’s important to inform yourself of all the changes that may take place and prepare accordingly.

Are you nervous about this coming appointment? Share your thoughts below!

About the author

Aliyyah Camp

Aliyyah Camp is a personal finance writer who specializes in writing about ways to save money, make money, build credit, and invest. She has a Bachelor's Degree in Communication from the University of Pennsylvania.

26 Comments

  • YOU TRUMP PEOPLE CAN SEE NO WRONG, JUST LIKE YOUR LIAR-IN-CHIEF! HES ALREADY MAKING MILLIONS OFF THE GOVERNMENT! I SEE THE MILITARY NOW IS LEASING A WHOLE FLOOR IN TRUMP TOWERS FOR 1.5 MILLION A YR. IN 2000 THEY HAVE HIM ON TAPE SAYING IF HE EVER WAS PRES. THAT HE WOULD MAKE MONEY FROM BEING PRES.! HE DOESNT CARE ABOUT THE POOR AND ANYBODY THAT SAYS DIFFERENT IS AN IDIOT! JUST WAIT UNTILL THEY GET RID OF THE ACA! THEN YOU IDIOT TRUMPSTERS WILL SEE ,BUNCH OF IDIOTS!

  • Anyone making less than $9,275 a year will not experience an increase as written here. If you make less than $9,275 you will probably have all federal income tax you payed refunded you because of the standard deductions.

  • In other words he still has not developed any concrete plans just the same old trust me it will be great. But we’ll see, every President has big plans that never make it to fruition. I hope he becomes more flexible and starts seeing thing for what they are if, not all plans go out the window.

    • Such a typical negative lib answer!!!!! So sick of your stupid attitudes!!!!!!
      He could give you a new car and you would still whine because you have to pay for the insurance. Just sick to death of it.
      “millions of dollars saved for college graduates” “The bigger issue here is college affordability.”
      “those making more than $9,275 but less than $37,650 will experience a decrease in income tax – from 15% to 12%.” (which is a great many of the work force!)
      These are proposals that he has made. He has a decent record so far of keeping his word and not being the typical “politician”, which is the MAIN reason he was elected!

  • So, now Mr. Trump is elected. Answer these questions……who is going to pay for
    the initial investment in the Mexico wall: Who is going to pay for the investigation
    into supposed voter fraud that we already know doesn’t exist. WE are. Taxpayer
    dollars. How do you reduce the tax rate and pay for programs like these.
    Simple answer………you don’t.

    • Its called supply-side resulting in economic velocity i.e. M1, M2, M3 throughput of lending and spending. This creates currency valuation increase (wealth) and federal revenue increase in a lower tax “rate” environment. Basically “Reagonomics” that resulted in the longest period of economic prosperity in our history. Take or retake EC101 and you’ll get it.

    • You can pay for it if you reduce needless wasteful spending , taxing businesses outsourcing production, reducing unecessary useless gov. employees. Yes there are ways to do it without increasing the tax burden of the citizens.

    • Do you seriously think there is no voter fraud? If not, why do Democrats fight so hard to stop every Republican bill to require proof of identity to vote? They say its racist, but what is racist about someone having to prove who they are? If a police officer pulls you over, you have to provide your driver’s license to prove who you are, you should at least have to do the same to place a vote, to prove that you are who you claim to be, and that you are a legal resident of the state, or country. There have been many cases where people that have been dead many years have somehow entered a ballot in a current election. Tell me how, in your mind, that isn’t voter fraud.

    • Maybe use the millions of dollars that are seized everyday at the borders taken from drug trafficking cartels try to get cash back to Mexico. Does anybody know where this money disappears to

    • You cut worthless liberal government offices and programs like shrimp running on tried Mills.oh,here’s an idea.get rid of most of the E.P.A. And the Dept.of education to start with.and any other agencies that think they have legislative powers that belong to Congress..That will save billions of tax payer dollars.see,easy!!!

  • Aliyyah; No way Trump gets the Repubs in the House to go for Maternity leave, tax credit for daycare maybe.
    John Sullivan

  • The movement with Obamacare was ridiculous from the very beginning. Being an over half-Centurion I’ve experienced the system as poor & a middle class. I’ve seen the hospitals totally go downhill, the attitude to the over 50 being “we don’t care about you, it would be just better if you went away”, spring up exponentially in place of a biased few. Healthcare workers losing and leaving their jobs because they don’t feel the same about providing aid and support they once loved to do without knowing why that “love of service” has suddenly changed in them. It’s like an air of stagnancy and repression looms over the system in place of being open and free to choose. Alternative remedies and ideas have bloomed however choosing them causes fear that one might be found out and punished in some way, because many were and did, some with their lives. Suppressing our freedoms to choose never results in expanding life and goodness. Any change that opens that up from the oppression of making someone have something they don’t want or need and be punished if you do not comply, is a good & better result. Period.

    • Well, Pyper, who pays for your medical care if you decide you don’t care about having health insurance? Most of the time, and in the end, it’s the American taxpayer and health insurance premium payer who foots your medical bills. Why should I, any taxpayer, premium payer, be responsible for your medical bills? Not to mention the fact, non-payers add to the costs charged by doctors and medical facilities to cover money they cannot collect for the care they have rendered. In the end, people who are responsible, have to carry the cost of those who refuse to be responsible for themselves…hence the PPACA, Obamacare if you like.

  • Hopefully No more new taxes for the 2017 year !!! Trump was my choice for President & will follow up with his promises !

    • I am on with you! What I found appaling is that Americans refer to President Trump as “Mr. Trump”, which shows a lack of respect. Also, the people should let him follow through with his plans. That is what he said would happen when he got into office. I think Americans are so used to having someone take office and not do what they say that when someone acts on their promises, they don’t know what to do. We should all show our support and hope and pray for the best. Remember, “No More Taxes”? Need I say more?

  • Trump has already began his pillage of the middle class, already a federal freeze on jobs. I am a disabled veteran living on a pension. The VA medical system needs more employees , not less.

      • He’s referring to the federal employees that work in the VA hospitals and clinics. With the VA already being understaffed, it makes it difficult to take care of the Veterans effectively.

    • I too am a disabled vet.100%service connected.thank God for President Trump and his freeze..The criminal V.A.needs to be gutted and the people replaced with folks that have to worry about loosing their jobs and possible prosecution for sludging of their jobs but accepting a pay check for it..What’s it been? 3 weeks..He’s already done more than Obama did in 8 years..Give the man a chance..On a lighter note,WELCOME HOME BROTHER!!! it will be OK
      Really,it will.he will be a lot better than Obama could have ever dreamed of being,and can’t be any worse than worthless last one,who by the way if you haven’t figured it out yet is the worste we ever had,so,IT WILL BE OK…

  • We as Americans all want change, but with both sides being untruthful to the public, which places them in office…at this point lower and middle class don’t know who to believe…these two classes are the engine and drive train to the US car, and I know at this point that they need a better financial, housing, health care, education, criminal justice, and retirement infrastructure…let’s not forget that the health care system that we have in place was drawn up by Republican’s, like it or not…I think that our health care should be free for everyone to utilize it…if our government as a whole can’t work together, then it’s time that the lower and middle class wake up and start making real and ideal decisions when electing those that we put into office…instead of racial, popular, greedy, idiotic, and etc decisions, because in the end we will only be hurting ourselves…remember those that are well off, rich and wealthy get to operate on the wholesale floor, while we, no matter what your race is that have far less, next to nothing, and poverty get to operate on the retail floor…I’m just stating facts.

  • I am hopeful about the changes Trump is planning when it comes to finances. It’s one of the boggest issues in the US. If he can fix it then a lot of peopke will be happy.

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